conventionally, a creditor’s claim is a claim that existed against the decedent during the decedent’s lifetime

to protect your client, construe the definition of a creditor’s claim liberally; do not make judgment calls as to whether any claim, including a specious claim, is valid

Timing and form of Submission of Claim (SCPA 1803)

Format of claim

format is irrelevant; any notice is sufficient

but a fiduciary should be diligent in paying any claim; seek documentation and/or information before payment

Personal liability for fiduciary (SCPA 1802; see also SCPA 1807)

be very careful during the period of seven months from issuance of letters, or place fiduciary in position of personal liability

SCPA 1807 placed personal liability on fiduciary if there is “fraud, negligence or collusion”

As to tax matters, be very careful, as there may be a big picture to keep in mind and make application to abate penalties that may be assessed by taxing authorities; perfect excuse: decedent was ill and, in fact, is not dead and executor has insufficient information to support paying penalties

Decision of Fiduciary to Reject or Accept Claim (SCPA 1806)

A claim is deemed rejected within 90 days of presentation

Always respond to claims; never ignore claimants; never permit your client to become a reactive executor/administrator

Creditor’s Remedies on Rejection of Claim

Proceeding/Action to Determine Claim (SCPA 1810)

Claimant can seek forum outside of Surr. Ct. within 60 days of rejection (or deemed rejection)

If real estate is involved, SCPA 1812 required a creditor to obtain leave of Surr. Ct. before obtaining execution on judgment

if fiduciary believes that claim is correctly rejected, beat creditor to punch by proceeding under SCPA 1809 to determine claim

if fiduciary was active, he has asked creditor to supply substantial information and/or documentation as to claim

Proceeding to Compel Estate Accounting (SCPA 2205(a); SCPA 1808(5))

avoid scenario where creditor can coerce an accounting from fiduciary

Executor’s Remedies/Duties on Rejection of Claim

Proceeding to Disallow Claim (SCPA 1809)

See above discussion

do not ignore conventional bars to claimant, such as statutes of limitation, etc.

consider operation of dead man statute (CPLR 4519)

Disclosure of Rejection in Accounting and Process Issued to Creditor (SCPA 1808)

Schedule D of accounting requires disclosure as to rejected claimaints and process must issue to permit creditor and opportunity to be heard

never permit beneficiaries of estate to encourage the fiduciary to ignore the creditor

Old law-creditors’ rights

Changes in statute

Contingent claims

reserves for estate taxes; avoid the fiduciary having problems after distributions: you never get the money back

Department of Social Services and liens

for purposes of the 7 month limitation period, there is presumed notice of Social Services liens if decedent was in nursing home